How Do I Calculate a Biweekly Mortgage Using the HP 12C?

A biweekly mortgage can help the real estate buyer in two ways. First, making more frequent, smaller payments may be easier than writing a single large monthly check. Second, paying biweekly will pay off the mortgage earlier than usual, saving on interest. The HP 12C financial calculator includes several special function keys that make it simpler to complete loan calculations than on generic calculators. Several keys are specifically dedicated to loan interest and payments, which are used to calculate mortgages.

1

Figure out the total amount loaned for the mortgage, which is called the principal. For example, assume an average 2010 San Francisco home sells for $750,000. If you make a 20 percent down payment of $150,000, a mortgage loan of $600,000 is required to cover the balance. Press "600000" and the "PV" key for present value, which is the starting value of the mortgage.

2

Total the number of interest accrual periods. Biweekly mortgages are still calculated at the monthly mortgage rate, even though they are repaid slightly faster. Multiply 12 by the number of years in the loan term. For a 30-year mortgage, press 12 and "Enter," then 30 and the multiplication key. This results in 360; press the "n" key to enter this figure as the number of interest accrual periods.

3

Calculate the interest rate per period. Interest rates are posted as an annual percentage rate, such as 5 percent. The interest rate per period is the percentage rate that, when multiplied by itself 12 times, totals 5 percent per year. This is mathematically called the "12th root of 5." Calculate it by pressing 1.05 followed by "Enter"; then press 12, the 1/x key, and the "yx" key. The result is 1.00407412, which is just over 0.4 percent per month. Press the "i" key to enter the interest rate.

4

Enter the future value of the mortgage at the end of 30 years--which is zero. Press 0, then the "FV" key.

5

Press the "PMT" key, which stands for payment. Since you have entered all of the other variables in the mortgage calculation, the HP 12C will calculate this amount and display it on screen: $3,220.93. Press 2 and the division key to show a biweekly payment of $1,610.46.

Tip

Paying your mortgage on a biweekly basis will pay it off faster than the 30-year period. In this article's example, the mortgage will be paid off in 26 years and three months. By switching to biweekly payments, you are paying a monthly amount 13 times a year instead of 12.

About the Author

Ellis Davidson has been a self-employed Internet and technology consultant, entrepreneur and author since 1993. He has written a book about self-employment for recent college graduates and is a regular contributor to "Macworld" and the TidBITS technology newsletter. He is completing a book on self-employment options during a recession. Davidson holds a Bachelor of Arts in American civilization from the University of Pennsylvania.